Do you have losses in Market-Linked CDs? Goodman & Nekvasil, P.A., May Recover Investor Losses
Goodman & Nekvasil, P.A., May Recover Investor Losses – Do you have losses in Market-Linked CDs?
A market-linked CD is a certificate of deposit with a return based on a collection of stocks or a market index, such as the S&P 500. One of these CDs can also be called an index-linked CD, an equity-linked CD, or an MLCD.
The SEC Lists Risks Associated with Market or Equity-Linked CDs:
Liquidity Risk. Investors typically will have limited opportunities, if any to redeem their equity-linked CDs prior to maturity. Moreover, the financial institutions do not guarantee the existence of a secondary market. Many equity-linked CDs do not permit the early withdrawal of your investment without the consent of the financial institution. If you need to withdraw your investment before the CD matures, you will incur withdrawal penalties. You also will lose any interest that you would accrue in a regular CD that has the same terms. There is no exception for CDs held in either a traditional IRA account or a Coverdell Education Savings Account (CSA). Therefore, you should carefully consider your retirement needs or the educational needs of a beneficiary of a CSA before investing in equity-linked CDs. Other equity-linked CDs allow for redemption only on pre-specified redemption dates. Therefore, you may not be able to redeem your equity-linked CD when you may want or need your money to be available.
Market Risk. If the equity-linked CD is sold before maturity, it may be worth less than its purchase amount or face value. The equity-linked CD will be subject to a number of variables, including stock market volatility and changes to the components of the linked index. In addition, there is no guarantee of principal return unless the investment is held to maturity.
Call Risk. An equity-linked CD may be callable. If an equity-linked CD is called, the investor’s return may be less than the yield for which the CD would have earned had it been held to maturity. The investor also may not be able to invest their funds at the same rate as the original CD.
Caps. Some equity-linked CDs also set a cap on your gain per year regardless of how well the relevant stock index performed. For example, if the S&P 500 goes up 20 percent and the CD participation rate is 70%, but the cap is 10%, your return will not be 14% (70% of 20 percent), but will be capped at 10%.
Tax Treatment. Equity-linked CDs may be treated differently than traditional CDs for tax purposes. Before investing in these products, you should carefully review the disclosures concerning the reporting of interest income and consult a tax adviser if appropriate.
Goodman & Nekvasil, P.A. May Recover Investor Losses on Market-Linked CDs
Goodman & Nekvasil, P.A., a Clearwater, Florida, law firm with a national practice representing victimized investors, continues to investigate brokerage firms that placed elderly retirees and other conservative investors in high-risk investments such as Market-Linked CDs.
Goodman & Nekvasil, P.A., has filed hundreds of cases against brokerage firms selling high-risk investments such as Market-Linked CDs and has recovered more than $180 million dollars on behalf of victimized investors. We allege in these cases that these investment recommendations were unsuitable for our clients in view of their financial situation, needs and investment objectives. All our cases are handled on a purely contingency fee basis.
You may have the right to recover your losses from the brokerage firm that sold you Market-Linked CDs and other high-risk investments to you. We strongly recommend that you act quickly, however, because statutes of limitation can be short in securities cases.
Kalju Nekvasil, Esq., formerly regional counsel with the NASD, now known as FINRA, has practiced in this area of the law for more than 35 years. We would like to discuss the possibility of your retaining our firm to represent you in an arbitration action.
There is no charge for an evaluation of your case. Further, we handle our cases on a contingency fee basis. This means that unless we recover money for you, we charge no attorney’s fee. Unless you recover any money, you pay us nothing, not even the costs and expenses which the firm will advance on your behalf. Finally, the filing of such a case should not affect your ownership of these investments in any way.
If you incurred losses on your investment in Market-Linked CDs and/or other high-risk investments and would like your case evaluated by a securities attorney (again, there is no charge for an evaluation and all cases are handled on a purely contingency fee basis), please contact us.